PDP Leaders Calls for All Bond Cuts to be Equal

Posted November 27, 2018

A candidate for the Popular Democratic Party’s (PDP) 2020 gubernatorial nomination wrote the expected next chairman of the U.S. House committee with jurisdiction over PROMESA – who he calls a personal “friend” – saying that the debt reduction for all of Puerto Rico’s bond creditors ought to be the same.

The PROMESA Financial Board has taken the opposite tack, negotiating different deals for different Government of Puerto Rico bond issuers.

Roberto Prats, who served a term in the territorial Senate before losing the congressional race in 2004 and was Chairman of national Puerto Rico’s Democratic Party committee until he resigned at the request of Governor Ricardo Rossello Nevares (New Progressive Party/NPP), wrote Representative Raul Grijalva (D-AZ) of the Committee on Natural Resources asserting that the debt adjustment for all of the territory’s government bond issuing entities “has to be parallel, under equal conditions.”

He also advised Grijalva, who supported PROMESA at the urging of Rep. Nydia Velazquez (D-NY), that the PROMESA Board is “very focused on fiscal plans, but there is no social or economic development plan” under PROMESA. Grijalva is a strong hedge fund critic, who has joined Velazquez in questioning the recoveries for bond creditors that the PROMESA Board’s fiscal plans would increasingly make possible.

Prats was the third most popular PDP gubernatorial hopeful in the recent, respected poll for newspaper El Nuevo Dia, with 17% to San Juan Mayor Carmen “Yulin” Cruz’s 30% and Senate Minority Leader Eduardo Bhatia’s 24%, but his candidacy should not be minimized. He and Bhatia both come from the “commonwealth” faction of the PDP that has leaders determined to not let nationalist Cruz become the party’s nominee. If Bhatia and Prats unite, with one becoming a candidate for the territory’s non-voting U.S. House seat, they could probably defeat Cruz in a PDP primary — if she does not first leave the party to head a new nationalist political movement.

As of now, however, none of the PDP candidates show the strength to beat Rossello and Resident Commissioner in the U.S. House Jenniffer Gonzalez-Colon (NPP/R) – but the margins are close enough that even Gonzalez-Colon, the islands’ most popular politician, is far from secure.

Prats also wrote Grijalva that he did not think the next Congress would provide for a choice in Puerto Rico on the territory’s future status but, if it is, “ELA” should be an option in a plebiscite under a new Federal law, with the statute treating all alternatives in a “balanced” manner. ELA is an acronym for words that translate into English as “Associated Free State” and are both part of the official name of the Government of Puerto Rico and the name of the PDP’s varying visions of Puerto Rico’s current and future status. Because Puerto Rico is not a free state (nation) associated with the U.S., the territory’s constitutional convention in 1952 resolved that the name of the insular government in English should use the word “Commonwealth” instead of “Estado Libre Asociado.”

Puerto Rico’s political status is actually unincorporated territory of the U.S. Prats does not seek to change that. Bhatia has said that the territory must choose between statehood and nationhood, while Cruz forcefully advocates nationhood in an association with the U.S. that either nation could end, ‘free association,’ the status of three former parts of a territory once administered by the U.S. in the Pacific.

Prats’ skepticism that the next Congress will provide for a Puerto Rican status choice stands in contrast to the pledge to sponsor a bill of Rep. Velazquez, who got her start in politics in the PDP and represents views of PDP leaders.

Prats made his status point on the heels of the leak of a draft letter from the current Chairman of the Natural Resources Committee, Rob Bishop (R-UT), a statehood advocate, which calls for another status plebiscite in Puerto Rico. The letter said that the vote should be conducted under U.S. Department of Justice auspices pursuant to a 2014 Federal law that was revalidated in PROMESA. Its purpose is to eliminate any dispute about the seriousness and fairness of a plebiscite under it.

Bishop also suggested that vote should be on the question of statehood. Permanence and equality within the U.S. won plebiscites under territorial law in 2012 and 2017 but their mandates were questioned by voter boycotts.

The Natural Resources Committee Chairman said that he is working on a final letter with Gonzalez-Colon but Rep. Stephanie Murphy (D-FL), who represents a large number of people of Puerto Rican origin, has already endorsed the idea and it has been accepted by Gov. Rossello, a national Democrat.

Bhatia wrote Murphy that he would consider a ‘Statehood: yes or No’ vote if a Puerto Rican choice of statehood is “binding” on the U.S. Government. Several dozen Federal laws would need to be changed and a transition period would be needed to make the unincorporated territory of Puerto Rico a State. The enactment of a Federal law to do all of this on the possibility that Puerto Rico would indisputably vote to become a State should not be expected.